Victoria
New South Wales
South Australia
QueenslandAustralia needs a coherent national C&I incentive signal. Without it, we will continue to see patchy growth, underinvestment in commercial decarbonisation, and our delayed progress on emissions reduction targets will worsen. The recently launched REGO framework may have a role to play in export traceability, but in its current form it will not drive behind-the-meter deployment on its own.
The state of Australia’s commercial solar industry is at a crossroads.
The recent launch of the Renewable Electricity Guarantee of Origin (REGO) program under Australia’s new Guarantee of Origin (GO) framework landed with a mix of anticipation and confusion. The Clean Energy Regulator (CER) has positioned REGOs as a voluntary instrument designed to verify the origins and emissions profile of renewable electricity. This framework is intended to support export markets that demand clearer emissions accounting at an affordable price. In theory, REGOs could become a meaningful signal of renewable energy attributes.
In practice, however, the voluntary nature of the program comes at an inconvenient time in history for facility level renewables and raises serious questions about whether it can drive real, or any meaningful investment for commercial and industrial (C&I) behind-the-meter solar systems.
The early market response last week was telling. Instead of softening, Large-scale Generation Certificate (LGC) prices actually increased after the announcement, reflecting uncertainty about how the REGO program will operate alongside the Large-scale Renewable Energy Target (LRET) through to 2030, rather than providing a sense of market confidence. Many participants are still working out how facilities – particularly those outside the below-baseline hydro and other government-owned assets – will interact with a voluntary renewable energy certificate framework. However, REGOs are unlikely to be issued until 2026, and when they are, they are set to only be for below baseline generators such as Government owned hydro stations that are excluded from creating LGCs due to their Kyoto non compliance. This means that despite the program’s launch, there is almost certainly going to be a long period of waiting before the wider market can understand how supply, demand, and pricing dynamics will settle.
The core risk in this area lies in the voluntary nature of the program. Globally, voluntary renewable energy and carbon certificates tend to trade at only a fraction of the value of compliance certificates. In most markets, that figure sits somewhere between 10 and 20 percent. If REGOs follow the same trajectory, the financial uplift they provide is likely to be modest at best for large behind the meter facilities and minimal or nil for small facilities. For large utility-scale projects already participating in the LRET, that might not matter too much. New developers have access to the Capacity Investment Scheme (CIS) and often have access to longer-term financing structures, large offtake partners, or corporate PPAs where emissions accounting is already seen as a selling point.
For the C&I solar sector, however, the story is very different. Behind-the-meter installations live or die on payback periods. A voluntary certificate valued at only a small portion of an LGC will not shift a project’s viability. Without stronger incentives, the C&I solar pipeline risks stalling in the current landscape. We have already seen this happen over the past 18 months across most of Australia, with projects being paused, quoted and requoted repeatedly before being approved or even reduced in scale. This has been a result of the sector lacking a clear and durable signal that investing in mid-scale, business-focused renewables is a priority. What is becoming apparent for C&I solar is that it is not like the emotive residential sector, nor is it headline-grabbing utility-scale. It is a workhorse of energy decarbonisation in warehouses, factories, and business precincts, and sadly it just doesn’t cut a ribbon well.
Further exacerbating this is the introduction of a new fee structure for REGO participants, which bring in additional administrative and cost friction at a time when clarity is needed. For many smaller generators these fees may equal or even exceed the potential revenue if it was to match current LGC prices, something its voluntary framework is almost certainly going to be unable to achieve.
This is something that Victoria’s policymakers appear to have understood and have recently taken action. The new activity (Activity 47) under the Victorian Energy Upgrades (VEU) program effectively rewrites the incentive landscape for C&I solar in the state. By allowing Victorian Energy Efficiency Certificates (VEECs) to be created in parallel with Small-scale Technology Certificates (STCs) or LGCs for systems up to 200 kW, Victorian businesses can now secure up to roughly $35,000 in additional support per project. That is real money that moves ROI and gets systems built. For systems beyond 200kW, Victoria then has Specified Measurement Methods (SMM) and Measurement and Verification (M&V) methods that deliver solar support for facility level projects ten times that of LGCs, in less than a quarter of the time.
In contrast, the Federal government has launched a voluntary accounting framework with limited financial pull, but has future potential for traceable and credible renewable energy such as biomenthane, biogas and Hydrogen – Product Guarantee of Origin (PGO) certificates.
The question could even be asked why a program to incentivise renewable gaseous energy (a significant market gap) wasn’t launched ahead of renewable electricity, given the Small-scale Renewable Energy Scheme (SRES) and LRET already exist.
The difference between these two approaches is marked – one is strategic, the other is practical – and only one will change investment behavior in the near term.
To be fair, both programs launched with some operational gaps. The REGO scheme released key documents and application forms after the scheme launch was announced. The VEU took a few weeks of clarifications and updates to Activity 47 before installers and Accredited Participants could proceed with confidence. Both of these are normal policy rollout friction. The difference is that Victoria has now largely resolved its administrative bottlenecks and the market is now tooling up with obvious excitement. Meanwhile, REGOs remain somewhat theoretical and will largely only benefit government owned facilities for the immediate future.
This leads to more questions than answers.
The biggest being, is this going to be the new normal? Will states be expected to fill the policy gaps left by federal frameworks that only focus on either the household voter or the headline megawatt projects? If so, what happens in states that do not have white certificate schemes? What happens in NSW, where behind-the-meter solar is specifically excluded from certificate creation?
We risk seeing national renewable investment skewed by geography rather than project merit, with developers already focusing overwhelmingly on Victoria at the risk of letting other states’ renewable projects stall.
Australia needs a coherent national C&I incentive signal. Without it, we will continue to see patchy growth, underinvestment in commercial decarbonisation, and our delayed progress on emissions reduction targets will worsen. The REGO framework may have a role to play in export traceability, but in its current form it will not drive behind-the-meter deployment on its own.
If the goal is meaningful decarbonisation across the real economy, then we need to recognise that C&I is not an afterthought, and that a $9 LGC price just doesn’t cut it. C&I solar is one of the most direct, scalable, and economically rational ways to cut emissions where energy is actually used, yet the only support program we have for it – LGCs via the LRET – has not had its ambition or targets updated for 20 years, and its replacement has no ambition at all.
Aaron Jenkins | CEO, Ecovantage
Aaron is a specialist in end-to-end solutions for medium to large energy users. This includes energy audits, technology implementation, carbon offsets and energy certificates.
